Adaptable service-system design: an analysis of Shariah finance in Pakistan

Abstract

An adaptable service system adjusts to the operational-level environments of organisations to enable heterogeneous services. This adaptation is important for sustainability and contextual-value (benefit) creation in a service system. Academics, such as those related to the current service-ecosystem concept, acknowledge the significance of this adaptation. However, little is known about a comprehensive adaptation process and how that integrates within a design for a service system. Also, practitioners are inclined towards this development, as the financial regulator in Pakistan has established an “evolutionary framework”. This framework encourages financial institutions to design Shariah finance services (SFS) which respond and evolve to the emergent market environments. The existing SFS models take benefit from Islamic jurisprudence and economics literatures to provide designs for transactions of financial and physical assets. However, the SFS models de-emphasis the intangible service-elements, where the adaptation is more likely to occur. Currently there is a great need for models that could explain the detailed adaptation process and its placement in an SFS design. The aim of this research is to develop, evaluate and theorise a model for conceptualising a holistic adaptable service-system design. The research aim is achieved through the proposal of a novel deferred service-system design (DSD) model. The DSD conceptualises a service-system design that adapts to the operational-level environments of SFS organisations in Pakistan. The DSD has seven constructs: (i) the service creators apply centrally-planned designs to create a service ii) they adapt these designs to meet the requirements of emergent contexts (iii) the service personnel, customers and aiding parties co-create a service by integrating their (iv) roles and actions, (v) resources and usufructs, (vi) rules and control to generate (vii) value. DSD is based on service-system design (SSD) literature, SFS literature and theory of deferred action (TODA)  a theory of system and organisation design. A multiple case study strategy is employed to evaluate, extend and theorise the DSD developed in phase I. Qualitative data are collected in four SFS organisations: Islamic commercial bank, Islamic life Takaful, Islamic mutual fund, and Islamic leasing organisation. Thirty-two in-depth narrative interviews of SFS personnel are conducted and analysed using a narrative discourse analysis method. The findings are triangulated by adding focus-group discussions, visualisations and service offering documents. The empirical findings are synthesised with the extant literature to develop a novel and comprehensive DSD in phase II. The findings show that the service co-creators apply a centrally-developed planned design typology (PDT). PDT includes different blends of SFS models (e.g., partnerships, sales, leases, agency and endowment), expected varieties (list, range and negative) and addable-deductible modules. The service co-creators and their inclusive systems (e.g., families, societies, markets, regulators and other government agencies) affect the planned service-system design to adapt or migrate. The service co-creators follow a novel six-step deferred adaptation process (DAP): emergence locale, information diffusion, knowledge diffusion, indexation, specifics evaluation and adaptation/migration. The empirical findings advance our understanding of a service-system design by showing how a planned design enables adaptation through PDT. More importantly, how the service co-creators follow a systematic process, DAP, to attain the desired adaptation or migrate off the scene. The findings also broaden the conceptualisation of SFS by showing how it is co-created by the financial institutions, customers and aiding parties. This is due to the SFS being perceived as a product of financial institution alone. This research also makes a contribution to service visualisation method by extending and using the service blueprint as an additional data-collection and analysis tool. This study provided fourteen implications for the practitioners.